Dirk Niepelt

On his blog, JP Koning discusses “dictionary money” and the ancient practice of simply redefining what “pound,” say, means. People have historically advertised prices for wares using a word, or unit of account, the LSD unit being the most prevalent. … from the Latin librae/solidi/denarii. The monarch was responsible for declaring what these words meant. … something to the effect that a pound, or £, was worth, say … silver coin[s]. This definition was subject to change. … Dictionary...

In a BIS working paper, Dagfinn Rime, Andreas Schrimpf, and Olav Syrstad analyze the apparent breakdown of covered interest parity (CIP). They argue that CIP holds remarkably well for most potential arbitrageurs when applying their marginal funding rates. With severe funding liquidity differences, however, it becomes impossible for dealers to quote prices such that CIP holds across the full rate spectrum. A narrow set of global top-tier banks enjoys risk-less arbitrage opportunities as...

The Bank of England has announced plans to open its central-bank-money settlement system (RTGS) to non-bank payment service providers. This, it hopes, will promote competition, innovation, and financial stability by creating more diverse payment arrangements.

In the FT, Mehreen Khan reports about the IMF’s conditional acceptance to lend to Greece. The IMF’s “agreement in principle” (AIP) tool draws on a practice where the fund is able to greenlight its involvement in a debtor country, conditional on the government and its creditors agreeing to future debt relief measures. Of course, the dispute about the merits of debt relief is unresolved. The IMF thinks Greek debt is ‘unsustainable’ and the European creditors should bear more losses, earlier...

In the Berner Zeitung, Johannes Reichen reports about planned maintenance work on Lake Gerzensee’s overflow. The Study Center (which owns the lake located on the territory of three communities) is portrayed as an institution that could have given more money … Interested parties are welcome to inquire if they wish to know more.

In a paper, Davide Cantoni, Jeremiah Dittmar, and Noam Yuchtman argue that the Protestant reformation after the year 1517 triggered major reallocation, due to religious competition and political economy. [T]he Reformation produced rapid economic secularization. … shift in investments in human and fixed capital away from the religious sector. Large numbers of monasteries were expropriated … particularly in Protestant regions. This transfer of resources shifted the demand for labor...

During the black death epidemic (1349–1353), atmospheric lead concentration collapsed as mining ceased. This is the result of a study by Alexander More, Nicole Spaulding, Pascal Bohleber, Michael Handley, Helene Hoffman, Elena Korotkikh, Andrei Kurbatov, Christopher Loveluck, Sharon Sneed, Michael McCormick, and Paul A. Mayevski on lead levels in an Alpine glacier. They write that [c]ontrary to widespread assumptions, … resolution analyses of an Alpine glacier reveal that true historical...

In the Trustlines Network every user is acting as a bank by granting credit lines to friends they trust. This allows to issue people powered money between friends and facilitate secure payments between strangers, by sending payments along a chain of trusting friends. Think of IOUs or cheques and netting in the blockchain.

In the FT, Martin Arnold reports about a new cross-border payment method tested by the Bank of England. The “interledger” program transfers money “near-instantaneously and without settlement risk.” The Bank of England set up two simulated RTGS systems on a cloud computing platform, using the Ripple interledger to simultaneously process “a successful cross-border payment”. This is not necessarily good news for the blockchain community. The Bank of England’s proof of concept is “about...

On his blog, Tony Yates raises the question whether the general public has a right to use central bank issued electronic money? Because of inclusion considerations? Or because providing cash and reserves is a central government function?